The U.S. President’s recent trade tariff threat fuels increased demand for Bitcoin and gold, as investors seek safer assets amid economic uncertainty.
In a statement on his social media platform, the President warns that countries attempting to replace the U.S. dollar as a reserve currency, including those supporting a proposed BRICS currency, will face 100% tariffs.
“In international trade or elsewhere, any country that seeks to replace the U.S. dollar should welcome tariffs and bid America farewell,” he states.
Bitcoin’s Market Reaction
Bitcoin’s price fluctuates in response to these trade policies. It currently trades near $104,500, according to Binance data, and is within 5% of reaching a new all-time high. However, ongoing concerns over trade tariffs slow Bitcoin’s growth.
Following Wednesday’s Federal Open Market Committee (FOMC) meeting, Bitcoin briefly rebounds from a $100,000 dip scare. The U.S. Federal Reserve maintains a hawkish stance, keeping the federal funds rate between 4.25% and 4.50% due to persistent inflation concerns.
The Fed acknowledges a strong labor market but states that economic risks remain balanced. Uncertainty persists over future interest rate cuts due to ongoing policy shifts in the U.S.
Market reactions include:
- 10-year Treasury yields rising 4 basis points to 4.581%.
- The U.S. Dollar Index increasing 17 basis points to a session high of 108.1.
- Concerns over a bearish long-term outlook for cryptocurrencies due to the Fed’s pause on rate cuts.
Institutional Investments in Bitcoin
Institutional investors show growing interest in Bitcoin-related assets. Norges Bank Investment Management, the world’s largest sovereign wealth fund, significantly expands its holdings in Metaplanet and MicroStrategy, now valued at approximately $500 million. Given MicroStrategy’s large Bitcoin reserves, investors view it as a key proxy for Bitcoin exposure in traditional finance.
Meanwhile, Bitwise Asset Management secures initial approval from the U.S. Securities and Exchange Commission (SEC) for an exchange-traded fund (ETF) tracking Bitcoin and Ethereum. The SEC approves Form 19b-4, marking a crucial step before trading begins. However, Bitwise awaits approval of Form S-1 before officially launching the ETF.
Regulatory Challenges for Bitcoin Adoption
Despite growing institutional interest, Bitcoin adoption as a reserve asset faces regulatory resistance. European Central Bank (ECB) President Christine Lagarde dismisses Bitcoin as an unsuitable option for central bank reserves, reinforcing skepticism among global financial regulators.
However, on-chain derivatives market activity suggests strong investor engagement, countering fears of an extended sell-off before Bitcoin’s next major rally.
Gold Reaches Record High Amid Economic Uncertainty
Gold surges to an all-time high of $2,799 per ounce early Friday, extending its monthly gain to 6.5%.
Investors turn to gold as a safe-haven asset amid concerns over the U.S. President’s tariff policies and rising geopolitical tensions. Expectations that protectionist policies could drive inflation higher further strengthen gold’s appeal as a hedge against price increases.
Additionally, the Federal Reserve’s pause on rate cuts, combined with a hawkish economic outlook, pushes U.S. Treasury yields higher and strengthens the U.S. dollar. While this adds pressure on non-yielding assets like gold, strong investor demand keeps prices elevated.
Market Outlook
Bitcoin and gold continue to attract investors as economic uncertainties persist. Institutional Bitcoin investments increase, and gold reaches new highs, with global markets closely watching monetary policies and trade developments to shape future investment strategies.